Reforming South Korea’s New Anticorruption Agency: How to Promote Independence without Inducing Paralysis

Back in December 2019, South Korean President Moon Jae-in achieved what seemed like a major victory in his anticorruption platform when the National Assembly established a new agency, the Corruption Investigation Office for High-Ranking Officials (CIO). Armed with broad investigatory authority, as well as a more limited but nonetheless important power to prosecute members of the Supreme Prosecutor’s Office (SPO), the CIO was supposed to be at the vanguard of the effort to clean up South Korean government. Yet for over a year, the CIO was unable to operate because it had no Director General. The reason for this had to do with the original design of the mechanism for selecting this official. In an effort to ensure a consensus candidate and avoid politicization of the agency, the original CIO legislation required that a Director General candidate receive the support of six out of the seven members of a Recommendation Committee composed of the Minister of Justice, the Minister of Court Administration, the President of the Korean Bar Association, two members from President Moon’s party, and two members from the opposition People Power Party (PPP). That system meant that at least one opposition party member would need to support a candidate for that candidate to be appointed, thus preventing the President from installing a crony.

The system, however, did not work as intended, because the two PPP members on the Committee refused to confirm any of the candidates put before the Committee. Finally, in December 2020, a year after the CIO’s creation, the National Assembly passed a bill that reduced the number of votes needed to recommend a candidate from six to five. This enabled the Recommendation Committee to appoint (over the opposition of the Committee’s two PPP members) the CIO’s first Director General, Kim Jin-wook, and the CIO finally began operating in January. Naturally, the PPP was outraged. This change to the appointment procedure, the PPP argued, undermines the CIO’s independence and enables the President to ensure that this powerful agency is run by a loyalist, who is likely to be unfairly biased against the opposition.

This concern is fair, up to a point. Three of the seven members of the Committee—the two members of the majority party and the Minister of Justice—are closely aligned with the President. The Minister of Court Administration is appointed by the Chief Justice of the Supreme Court, not the President, but the President appoints the Chief Justice, and Korean Chief Justices have a history of colluding with presidents. A fifth member, the President of the Korean Bar Association, is elected by a vote among the local bar chapters. While this may provide some check on the President, it is a weak one, and the PPP and other critics are right to be concerned.

Nevertheless, the reduction in the required number of votes from six to five was an improvement under the circumstances. The threat of biased anticorruption investigations, though real, is not much greater with the new version of the CIO than under the status quo. And while greater safeguards would be welcome, there are better ways to promote an unbiased agency than to give the opposition a veto over its leader.

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South Korea’s New Corruption Investigation Office Needs Independent Prosecutorial Power

When South Korean President Moon Jae-in took office, it was clear that fighting corruption was going to be high on his agenda. After all, his predecessor Park Geun-hye was sentenced to 24 years for pressuring conglomerates such as Samsung and Lotte to give millions of dollars to her friend’s foundation. And the president before her was sentenced to 15 years for collecting bribes of up to $5.4 million from Samsung in exchange for favors. President Moon capitalized on the nation’s anger and sense of betrayal, pledging to crack down on corruption. Part of his reform agenda included addressing how Korea’s investigative and prosecutorial bodies—including the Supreme Prosecutor’s Office (SPO)—have handled, or mishandled, corruption cases.

This concern led to the enactment, in 2019, of legislation authorizing the creation of a new agency called the Corruption Investigation Office for High Ranking Officials (CIO). The CIO can investigate certain crimes, such as bribery and embezzlement, related to the duties of current and retired high-ranking public officials—including, but not limited to, the President, SPO prosecutors, judges, and members of the National Assembly. The CIO has the authority to investigate current and former officials, their family members, and other individuals who are implicated in the crimes under investigation. This means if a company employee bribes the grandson of a public official, then the CIO can investigate the company. Furthermore, other law enforcement agencies must immediately notify the CIO when they learn of crimes that fall under the CIO’s investigative jurisdiction, and the CIO can compel those cases to be transferred to it.

There is, however, a significant problem with this new system, one that will likely impede the CIO’s ability to hold high-level politicians and their cronies accountable: The CIO lacks the power to prosecute most of the cases it investigates. The CIO does have the limited authority to prosecute SPO prosecutors (including the Prosecutor General, who heads the SPO), as well as judges and high-ranking police officers. But for all of its other investigations, the CIO must turn the results of its inquiries over to the SPO, which retains the discretion to decide whether or whom to prosecute. Without independent prosecutorial authority, the CIO is unlikely to live up to its potential to make significant progress against high-level corruption.

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South Korea’s Moment for Chaebol Reform is Now

In late 2016, South Korea’s President Park Geun-hye was impeached and removed from office following revelations of massive corruption in her government. While the scandal included plenty of sensational and salacious material, the core accusations involved improper quid pro quo relations between the Park administration and several chaebols—the massive, dynastically controlled business conglomerates that are the cornerstones of the South Korean economy. Following impeachment, President Park and several senior officials in her administration were arrested, tried, and convicted for a variety of offenses, including bribery, abuse of power, and coercion. In the aftermath of this massive scandal, new President Moon Jae-in swept into office with a commanding majority and a pledge to clean up the mess by instituting strong anticorruption reforms.

However, most of President Moon’s anticorruption initiatives have received mixed reviews at best. For example, President Moon’s proposed Anti-Corruption Agency, though authorized by parliament in December 2019, has yet to be established, and has been roundly criticized for its potential to be used to suppress political opponents. And President Moon’s attempt to exert more centralized control over prosecutors was derided by critics as a retaliatory measure against prosecutors investigating government corruption. But perhaps the greatest disappointment of the Moon administration’s approach to anticorruption is its reluctance to target the root of the country’s most serious corruption problem: the unchecked power of the chaebols. Though President Moon announced chaebol reform as a platform priority, his actions since his election have borne little fruit.

That chaebols were at the center of the Park administration scandal is neither surprising nor unusual. Indeed, chaebols have been at the center of South Korea’s most significant grand corruption cases, and they are routinely implicated in scandal after scandal after scandal. But neither the chaebols themselves nor their senior executives face a meaningful risk of significant liability. Even when prosecutors bring cases, chaebols and their executives benefit from judicial leniency, a phenomenon that has been documented both anecdotally and quantitatively. Indeed, South Korean high courts are infamous for overturning stricter lower court sentences in favor of what has come to be known as the “three-five” rule, available exclusively for chaebol executives: a guilty chaebol executive typically receives a three-year prison sentence, suspended for five years, and subsequently commuted—meaning that the executive serves no prison time. There are two likely explanations for this unusual and counterproductive judicial leniency toward chaebols and their executives. Continue reading

A Cultural Defense to Bribery? The Solomon Islands’ Approach

Gift-giving usually has positive connotations as an expression of love, respect, friendship, gratitude, or celebration. However, when the recipient is a public official, there is always the concern that the “gift” is nothing but a thinly-veiled bribe. For this reason, countries around the world have placed restrictions on the character and value of gifts that public officials are allowed to accept. But in societies where giving gifts – including, perhaps especially, to powerful or influential figures – is an important part of the culture, treating all (sufficiently large) gifts as unlawful bribes is more than usually challenging. Indeed, a recurring question for anticorruption reformers is whether or how anti-bribery law should make allowances for local cultural norms and practices, especially those related to gift-giving. This question – often framed as one of “cultural relativism” – frequently comes up in the context of developing countries (such as Indonesia or various Pacific islands), though it is not exclusive to such countries (see, for example, discussion of this same issue in South Korea).

One country that has recently faced the challenge of regulating cultural gift-giving to and by public officials is the Solomon Islands – a small state in the Pacific Ocean consisting of over nine hundred islands, a population of about 600,000, and a rich and fascinating history. For years, the Solomon Islands has been dealing with pervasive corruption at all levels of government, most notably in natural resources management, which has had disastrous ramifications for the country’s economic development (see here, here, and here). Like other Pacific islands, the Solomon Islands is home to a practice of traditional gift-giving to and by public officials, which in many other jurisdictions could be viewed as legally problematic. According to a local custom (as explained in an official government document), public officials, as members of their community, are “expected to contribute to community events such as weddings, funerals, feasts or church gatherings” and are “obligated to reciprocate with gifts if and when they visit communities and are presented with gifts.”

In July 2018, as part of a comprehensive national anticorruption scheme, the Solomon Islands’ Parliament enacted the much anticipated Anti-Corruption Act (ACA). The ACA is especially notable, and unusual, in its approach towards customary gifts and bribery. Instead of capping the monetary value or limiting the type of gifts which public officials are allowed to accept, the ACA introduced a new cultural defense to the offence of bribery of public officials. According to this defense, a public official who accepts or solicits something of value, as well as the individual who offers or gives it, is not guilty of bribery if the defendants can prove that their respective acts were conducted: (1) “in accordance with custom,” (2) “openly, in the course of a traditional exchange of gifts,” and (3) “for the benefit of a community or group of people and not for an individual.” According to Prime Minister Rick Houenipwela, the ACA’s cultural defense is required as part of the government’s obligation “to respect our customs and traditional cultures” as “a multi-ethnic post conflict country.” However, the cultural defense has been criticized by many, including the Parliament’s Bills and Legislation Committee (see here and here) and Transparency Solomon Islands, which referred to this defense as “a good example of bad law.”

In this post, I do not attempt to answer the question whether the Solomon Islands’ customary gift giving should be criminalized. I do wish to argue, however, that even if we assume that local gift-giving customs are worth protecting, the ACA’s cultural defense to bribery in its current form is highly susceptible to misuse and may undermine the government’s anticorruption efforts. Both the Solomon Islands and other jurisdictions that might be considering a similar cultural defense should take heed of four significant problems with the defense as currently written: Continue reading

“Corruption Proofing” Statutes and Regulations: The Next Big Thing in Anticorruption Strategy?

So-called “corruption proofing” is an ex ante preventive measure that entails review of the form and substance of legal acts (principally statutes or regulations) in order to minimize the risk of future corruption. It is a relatively new strategy in the anticorruption toolkit. As of 2015, 13 countries had enacted some form of corruption proofing: Armenia, Albania, Azerbaijan, Kazakhstan, South Korea, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Ukraine, and Uzbekistan.

While there is some divergence between each country’s specific practices, generally a corruption proofing system requires that draft and/or existing legal acts (statutes and regulations) are subjected to a review process by a designated institution (or institutions), which are tasked with identifying corruptogenic factors”—aspects of those laws that might create risks of future corruption. Examples of corruptogenic factors that corruption proofing systems have identified include unclear definitions of the rights and duties of public officials; broad discretionary power; over-broad freedom to enact by-laws and other subsidiary legislation; linguistic ambiguity; inadequate sanctions; lack of (or conflicting) regulatory and administrative procedures; and disproportionate burdens on citizens to exercise their rights. The reviewing institution then makes recommendations for changes to the law that would mitigate those risks. The governmental body from which the legal acts originate (the parliament, in the case of statutes) is obligated to consider these recommendations but is not required to implement them, though in some systems the governmental body must state its reasons for rejecting the reviewing institution’s recommendations. Another common practice is that the proofing agency’s recommendations (and, if applicable, the explanations for why they were disregarded) are circulated as an annex to the draft law being debated in the legislature and are also published online, thus providing both lawmakers and citizens with more information about the potential corruptogenic factors associated with the law. Continue reading

The Case for Preserving South Korea’s Crackdown on Gifts

In September 2016, South Korea’s Improper Solicitations and Graft Prohibition Act, better known as the “Kim Young-ran Law,” came into effect. The Kim Young-ran Law, regarded by some as the strictest anti-graft law in the world, included important provisions aimed at combating Korea’s deep-seated gift-giving culture that infested the public sector and cultivated corruption (including, for example, the corruption blamed for the 2014 Sewol ferry disaster, as well as the scandals that ultimately led to the impeachment of former President Park Geun-hye in 2017). The law’s provisions on gifts ban public servants, educators, and journalists from receiving free meals worth over 30,000 won ($28), gifts over 50,000 won ($46), and congratulatory or condolence money over 100,000 won ($92)—the so-called “3-5-10” restriction.

Although a majority of the Korean public believes that the Kim Young-ran Law has been effective in reducing bribery, the restrictions on gifts were widely perceived as too strict, with almost two-thirds of surveyed Koreans supporting an amendment that would loosen the 3-5-10 thresholds. In light of this, in December 2017 the legislature revised the law to double the price limits on gifts for agricultural, livestock, and fishery goods to 100,000 won, and to reduce the allowance for congratulatory or condolence money to 50,000 won—so, it’s still a “3-5-10” restriction, though the “5” and the “10” have flipped. However, scholars are concerned that even this alteration of the original rules would set a precedent for changes and exceptions that would defeat the initial spirit and purpose of the Kim Young-ran Law. Indeed, the arguments for relaxing the gift limitations do not withstand scrutiny; it was likely a mistake for South Korea to give in to pressure to amend the law, and it would certainly be a much graver mistake to relax the 3-5-10 thresholds further. Those who believe that the Kim Young-ran law’s limits on gifts are too stringent have advanced three major critiques, but none of them is persuasive:

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Two Essential Volumes on Corruption

The study of corruption and what to do about it is no longer an academic or policy-studies backwater.  Matthew’s bibliography of corruption-related publications now lists over 6,000 books, articles, and reports and, as his regular updates show (thank you Matthew), the list continues to grow at the rate of some 50 plus per month.  That is the good news.  It is also of the course the bad news.  Few practitioners, and I suspect even academics, can claim to have absorbed the learning in the 6,000 current documents let alone keep up with the outpouring of new works.

For those who can’t , I recommend two recent books: Dan Hough’s Analysing Corruption and Alina Mungui-Pippidi and Michael Johnston’s Transitions to Good Governance: Creating Virtuous Circles of Anti-Corruption.  Both do an excellent job of synthesizing and extending recent scholarship on corruption issues, and both do so in a sophisticated but accessible manner.  Both have the added virtue of being available in reasonably priced paperback editions. Continue reading

Why Samsung’s Recent Conviction Will Not Rid South Korea of Chaebols

Samsung is in search of a new leader after Jay Y. Lee, grandson of Samsung’s founder, was convicted of bribing South Korea’s President to approve a controversial merger between two Samsung affiliates. Many thought that the proposed merger, which had been heavily criticized by independent analysts and investors, would not receive the legally-required approval from then-President Park Geun-hye’s administration. Lee allegedly bribed President and people close to her, to the tune of $38 million, for her support. When this corruption was exposed, President Park resigned and Lee was prosecuted and ultimately convicted.

Some hope that these dramatic developments portend more far-reaching changes in South Korea’s economy—in particular, the destruction of the chaebols (literally “wealth clans”), the multinational conglomerates in which leadership is passed from person to person within a family. Many credit chaebols with the successful post-World War II transformation of South Korea’s agrarian economy into an international economic powerhouse, but others criticize chaebols on a number of grounds, including the claim that they concentrate power and wealth in the hands of a small family minority, pay low dividends to ordinary investors, and facilitate the sort of grand corruption exposed in the Samsung affair.

After President Park resigned in disgrace, she was replaced by President Moon Jae-in, promised to put an end to chaebols altogether. Alas, this is unlikely. Indeed, it’s looking increasingly like Samsung’s recent scandal will not have a lasting effect on chaebols, or even on Samsung’s long-term profitability. Continue reading

When Lunch is a Bribe: American and Korean Law Compared

It is the rare businessperson or lobbyist who takes a politician or bureaucrat they barely know to lunch just for the pleasure of their company.  Lunch-buyers may enjoy the food (particularly if the money comes out a corporate pocket) and not all politicians and bureaucrats are self-centered bores.  But face it: the main reason bureaucrats and politicians world-wide are wined and dined by people they hardly know is because they are in positions of power and the meal-buyers want to influence them — perhaps to persuade them to purchase the lunch-buyer’s product for their ministries, maybe to change their minds about pending legislation.  Yet as obvious as the reason for picking up a lunch the tab is, in the Republic of Korea, and many American jurisdictions as well, on its face the law provides that if lunch-buyers admit why they paid for lunch, they and their luncheon companion go to jail.

That despite these laws Seoul’s upscale restaurants and their counterparts in many American state capitols continue to do a brisk lunchtime business suggests many lunch-buying businesspersons and lobbyists and their government guests regularly deny the obvious.  It would be one thing if lawmakers had intended to turn this group into liars and hypocrites, but they did not.  It is instead an unintended consequence of laws actually meant to permit public servants to take lunch with those having business with them. Continue reading

London Anticorruption Summit–Country Commitment Scorecard, Part 2

This post is the second half of my attempt to summarize the commitments (or lack thereof) in the country statements of the 41 countries that attended last week’s London Anticorruption Summit, in four areas highlighted by the Summit’s final Communique:

  1. Increasing access to information on the true beneficial owners of companies, and possibly other legal entities, perhaps through central registers;
  2. Increasing transparency in public procurement;
  3. Strengthening the independence and capacity of national audit institutions, and publicizing audit results (and, more generally, increasing fiscal transparency in other ways); and
  4. Encouraging whistleblowers, strengthening their protection from various forms or retaliation, and developing systems to ensure that law enforcement takes prompt action in response to whistleblower complaints.

These are not the only subjects covered by the Communique and discussed in the country statements. (Other topics include improving asset recovery mechanisms, facilitating more international cooperation and information sharing, joining new initiatives to fight corruption in sports, improving transparency in the extractive sector through initiatives like the Extractive Industries Transparency Initiative, additional measures to fight tax evasion, and several others.) I chose these four partly because they seemed to me of particular importance, and partly because the Communique’s discussion of these four areas seemed particularly focused on prompting substantive legal changes, rather than general improvements in existing mechanisms.

Plenty of others have already provided useful comprehensive assessments of what the country commitments did and did not achieve. My hope is that presenting the results of the rather tedious exercise of going through each country statement one by one for the language on these four issues, and presenting the results in summary form, will be helpful to others out there who want to try to get a sense of how the individual country commitments do or don’t match up against the recommendations in the Communique. My last post covered Afghanistan–Malta; today’s post covers the remaining country statements, Mexico–United States: Continue reading